PRIMARK hailed a high street comeback yesterday but warned that its policy of not hiking prices in the face of rising costs would leave group profits flat this year.

The budget fashion chain’s owner Associated British Foods said sales and footfall in its stores had been very strong since the start of March, helped by its spring and summer ranges and the recent warm weather.

“January and February were very quiet but in the run-up to Easter it has been busier. Shoppers are still feeling the squeeze but they have come back,” said chief executive George Weston.

Half-year sales at its 214 outlets to March 5 rose only 3 per cent, half of last year’s growth levels. Margins took a hit from its decision to absorb January’s VAT rise and higher cotton costs by not raising prices.

Weston warned cost pressures would grow but vowed to continue its policy of not ­passing these on to customers. “We will stay true to ourselves,” he said.

However the subsequent hit to margins and a £20million dive in UK sugar profits in the ­second half following the destruction of some of its sugarbeet crop in the thaw after last December’s cold snap would leave group profits flat this year. It had previously forecast a profits rise.

January and February were very quiet but in the run-up to Easter it has been busier

Primark chief executive George Weston

Its shares fell 61p to 984p.

Broker Panmure Gordon said it was “encouraged” by Primark’s recent performance.